The crisis in Crimea has shifted “to a military stage” as the Ukrainian government responded to the killing of one its soldiers by authorising its troops to open fire to defend themselves from Russian forces.

Hours after Vladimir Putin formally announced the annexation of the occupied Crimea region into Russia, a Ukrainian soldier was apparently shot dead as pro-Kremlin forces stormed an army base.

As tensions rapidly escalated on the ground, the US warned Mr Putin he was on “the wrong side of history” and Britain announced the suspension of all military cooperation with Moscow.

Joe Biden, the US vice-president, said America was considering sending additional troops to the Baltics to reassure its Eastern European allies in the face of Russian aggression.

The Ukrainian soldier’s death, the first fatality since Russian forces moved into Crimea last month, was immediately denounced as “a war crime” by the government in Kiev.

“The blood of Ukrainian soldiers is on the leadership of the Russian Federation and specifically President Putin,” said Oleksandr Turchynov, the country’s interim president.

A member of a pro-Russian militia was later reported to have been killed during the same gun battle.

There was confusion over how the militia man had died and it appeared he may have been accidentally shot by his own side rather than killed by resisting Ukrainian forces.

The Ukrainian military had previously forbidden its troops from opening fire in an effort to prevent the outbreak of violence. Last night that order was withdrawn and Ukrainian soldiers in Crimea were authorised “to use weapons to defend and protect the lives of Ukrainian servicemen”.

Ukrainian soldiers march inside the military airbase in Belbe, near Sevastopol (Viktor Drachev/ Getty)

Arseniy Yatsenyuk, the Ukrainian prime minister, addressed the nation in a live television broadcast, warning his countrymen: “The conflict is shifting from a political to a military stage.”

“Russian soldiers have started shooting at Ukrainian military servicemen, and that is a war crime,” he added.

It was not clear whether Russian troops or pro-Moscow militias were responsible for storming the army base outside of Simferopol, Crimea’s main city.

The unidentified gunmen were reportedly wearing Russian-style uniforms and had their faces covered as they attacked the military outpost.

The Ukrainian government said the warrant officer had died from a gunshot wound to the neck and another soldier had been injured. Their comrades were arrested at gun point, the defence ministry said.

The first shooting death came hours after Mr Putin delivered a victorious speech in the Kremlin’s St George’s Hall, interrupted by applause at least 30 times in 47 minutes.

“Crimea has always been an integral part of Russia in the hearts and minds of people,” he said as he signed a treaty to make Crimea part of Russia.

Sneering at the decision by the Soviet leadership to transfer Crimea in 1954, Mr Putin said it had been handed over like a “pack of potatoes” and that his actions were correcting a historic mistake.

Often rebuking the West for following Cold War logic in its relations with Russia, Mr Putin suggested that the push to reclaim Crimea was rooted in a fear that post-revolutionary Ukraine would join Nato.

“Kiev has already announced its intention to join Nato. What would that mean for Crimea and Sevastopol? That in the city of Russia’s military glory would appear a Nato fleet, threatening to Russia’s south regions,” he said.

The treaty now heads to the Russian parliament for approval, a process expected to take less than a month, according to Leonid Slutsky, the speaker of the Duma and a target of US sanctions.

John Kerry, the US secretary of state, said Mr Putin’s narrative of the Crimea crisis, especially his insistence that ethnic Russians were threatened by the new government in Kiev, “didn’t jive with reality or with what’s happening on the ground”.

“The president may have his version of history, but I believe that he and Russia, for what they have done, are on the wrong side of history,” Mr Kerry said.

A day after the US and Europe announced sanctions on Ukrainian and Russian officials involved in the incursion, the White House said that more sanctions were on the way unless the Kremlin withdrew its forces from Crimea.

“We condemn Russia’s moves to formally annex the Crimean region of Ukraine. Such action is a threat to international peace and security and it is against international law. We would not recognise this attempted annexation,” said Jay Carney, the White House press secretary.

Russian officials responded with mockery to the Western sanctions and the Russian stock market had risen by the end of the day.

“This is a big honour for me,” said Vladislav Surkov, one of Mr Putin’s closest advisors, after it was announced he was being targeted by US sanctions.

Dmitry Rogozin, a close Putin ally who has mocked his inclusion on the sanctions list, hinted that the Kremlin was not yet finished and could also look to absorb the renegade Moldovan territory Transnistria. Mr Rogozin, a deputy prime minister, said Transnistria and the Russian government would hold a “big meeting” on Thursday to discuss closer alignment.

Nicolae Timofti, the Moldovan president, responded that accepting Transnistria’s petition would be a “counter-productive” step for Moscow. “It would be a mistake if Russia took such a step,” he said.

With Islamist websites announcing the death of Doku Umarov, the leader of Chechen rebels and the Kremlin’s most hated foe, the Russian leader rounded off a banner day by addressing a rally of supporters in Red Square.

Many in the crowd were happy but urged their leader to keep on pulling in more former Soviet territories. “I am so proud of my president and my country,” said Anastasia Garashchenko, 30, holding a large Russian flag. “I would like other territories, such as Transnistria, to join to Russia as well.”

During a visit to Warsaw, Mr Biden raised the prospect of further US ground and naval forces being sent to the Baltic in a show of strength to reassure Eastern Europe.

Two weeks ago, the US sent six F-15 fighter jets to reinforce regular Nato patrols over the region.